April 26, 2008

Cohen on ethanol

I’ve been one of those big ethanol skeptics for a while, distasteful of the idea of turning food into fuel during a food shortage. Roger Cohen sets the record straight by letting us know that, down in Brazil, they have a much better way of making ethanol: not from corn, but from sugarcane, and it’s more efficient as well. If your concern is for the Amazonian rainforest, he addresses that in the full article as well. It’s a great piece.

Hundreds of millions of people have moved from poverty into the global economy over the past decade in Asia. They’re eating twice a day, instead of once, and propelling rapid urbanization. Their demand for food staples and once unthinkable luxuries like meat is pushing up prices.

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Those hundreds of millions of Chinese and Indians now eating more will be driving cars within the next quarter-century. What that will do to oil prices is anybody’s guess, but what’s clear is that ethanol presents the only technically and economically viable alternative for large-scale substitution of petroleum fuels for transport in the next 15 to 20 years. It’s not a panacea, but it’s a necessary bridge to the next technological breakthrough.

The question is: which ethanol?

Right now, the biofuel market is being grossly distorted by subsidies and trade barriers in the United States and the European Union. These make it rewarding to produce ethanol from corn or grains that are far less productive than sugarcane ethanol, divert land from food production (unlike sugarcane), and have dubious environmental credentials.

What sense does it make to have a surplus of environmentally friendly Brazilian sugar-based ethanol with a yield eight times higher than U.S. corn ethanol and zero impact on food prices being kept from an American market by a tariff of 54 cents on a gallon while Iowan corn ethanol gets a subsidy?